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Audit and Service Review Information FAQ

Q. Why was the service review conducted of the El Camino Hospital District?

A service review is a standard review conducted every five years to better understand the public service structure, ensure that health services are being efficiently and effectively provided in the District and also affirm that the District is still carrying out its purpose.

Q. Why was the audit conducted of the El Camino Hospital District?

The audit was performed to answer specific questions related to the District governance structure, its financial relationship to the Hospital Corporation, the financial condition of the District and Corporation, the source and use of funds used for hospital operations and capital improvements, and the acquisition of the Los Gatos campus.

Q. What is the District’s position on the findings of the report?

The District is pleased that the report concluded that the District and the Hospital Corporation are operating appropriately, effectively and efficiently, that they provide a vital healthcare service in the community and, most importantly, that the District has demonstrated an ability to contain costs and improve financial performance.

The District strongly disagrees with the report’s recommendations to have the District residents give up control of the Mountain View Hospital and to begin actions towards dissolving the District if the recommended changes, that would limit how the District provides its health care services, are not implemented, especially given that the report acknowledges strong, positive results achieved under the current structure.

The District doesn’t believe it is within LAFCo’s authority to ask us to limit our ability to make decisions that are in the best interest of the residents living in our District.

The District takes very seriously our obligation to deliver effective and efficient health care services to the community, and don’t believe we should undertake any hasty actions, which could negatively impact thousands of District residents.

Q: Why are there two entities (District and Hospital Corporation) and what’s the difference?

The El Camino Hospital District was established in 1956 to utilize taxpayer dollars to build the hospital, but the day-to-day operations were paid for (then as well as today) by the hospital’s patients and their insurance companies, and later, various governmental programs, primarily Medicare and Medi-Cal.

In the 1980s, the California legislature determined that the District structure made it difficult for Health Care District hospitals to compete effectively with for-profit and nonprofit healthcare organizations, threatening their very existence.

Therefore, the Legislature enacted Health and Safety Code 32121(p), which gave all Health Care Districts the power to engage in certain transactions with a nonprofit corporation. It allowed the Hospital Corporation to transfer property, equipment and other assets relating to the operation or maintenance of El Camino Hospital to the non-profit organization.

Separate boards govern each separate entity. The District Board exists to help protect the community’s assets and make sure the taxes are being used to create the healthiest environment for the community, while the Hospital Corporation Board oversees the day-to-day operations of the nonprofit, 501(c)(3) hospital.

Q. Is there still a need for the Hospital District?

Yes. The District provides support for critical health care services provided to thousands of residents annually through its Community Benefit program and for improvements to hospital facilities in the District. We believe it is outside LAFCo’s authority to take away powers and rights that have been granted to the District by the State legislature.

Q. Will the District be dissolved?

There is no immediate action for dissolution so the District will be able to continue providing valuable health care services as it always has, under a structure that report acknowledges is operating effectively and efficiently.

The District strongly disagrees with the report’s recommendations to have the District residents give up control of the Mountain View Hospital and to begin actions towards dissolving the District if the recommended changes, that would limit how the District provides its health care services, are not implemented, especially given that the report acknowledges strong, positive results achieved under the current structure.

Q. Where would the property tax money go if the District was dissolved?

Taxpayers would receive no refunds, nor have reduced taxes. Tax revenues collected would be redistributed to other government agencies that receive property taxes with no legal mandate to use its increased tax allocation for healthcare purposes. We oppose dissolution, since the District provides important controls to keep the Hospital Corporation controlled by District voters.

Q. Are tax dollars used for any community benefits in areas outside of the District?

The District Board ensures that District funds are expended for the benefit of the District and the people served by the District. The tax dollars received by our District fund community programs in our District. Because of the efficient use of funds, the District is able to provide better services to the community based on those tax dollars than they might be under any other organization. Tax dollars are used in accordance with State law and the District bylaws.

Q. What did the report conclude about the Los Gatos Hospital acquisition?

This report, like the LAFCo staff report before it, concluded that District has not used District funds for the purchase or ongoing operations of the Los Gatos campus.

Q. How is the District increasing transparency?

The District welcomes a constructive dialogue about how to further increase transparency and have already taken steps to better inform our community about the relationship between the District and the Hospital Corporation, to enhance financial reporting protocols and to increase outreach and education regarding the District, including a review of the governance and organizational process, separate financial reports for the two entities, and the creation of a separate and distinct District website to increase transparency and ensure separation between District and Hospital Corporation activities.

Q: What are the next steps in the process?

The report will be presented to the LAFCo Board during the upcoming May 30, 2012 meeting. Until Friday, June 22, 2012 the report will be available for written public comment that LAFCo staff will consider and address.

Q: How is the District planning to respond?

A statement containing our full response is available in the News section and we will continue to work closely with LAFCo staff to discuss solutions that will ultimately provide optimal delivery of health care services to our community.

Q: As a concerned citizen of the District, is there anything I can do?

If you are concerned about the recommendations in this report, we encourage you to make your feelings known to the LAFCo Board and staff during the public comment period. Until Friday, June 22, 2012 the report will be available for written public comment that LAFCo staff will consider and address.